issn : 2454-9150 spatial distribution of start-up cities...

International Journal for Research in Engineering Application & Management (IJREAM)

ISSN : 2454-9150 Vol-05, Issue-03, June 2019

665 | IJREAMV05I0351205 DOI : 10.35291/2454-9150.2019.0284 © 2019, IJREAM All Rights Reserved.

Spatial Distribution of Start-up Cities of India

Dr. Daljit Singh

Associate Professor, Department of Geography, Swami Shraddhanand College, (University of

Delhi), India.

Abstract - Cities are centers of very high density of population, mainly engaged in non-agricultural activities. The

population is usually well educated, trained, highly technical and innovative. Cities with such population are vibrant

and energetic and lead the country in different sectors of socio-cultural-economy of the country. Historically cities led

the society in trade and commerce, administration, education and industrial activities. In economic development

planning cities acted as the Growth Pole or Growth foci through which the development trickle down to smaller

settlements. The Information and communication technology brought a new entity named startups in highly technical

cities. Initially startups were heard in the Silicon Valley of United States of America, concentration of technology based

companies. Later on with the dispersion of technology, outsourcing of processing component of these big companies

and economic compulsions, these big companies start operating from different parts of the world. This led to emergence

of startups even in developing countries like India. Our prime minister said, “I see startups, technology and innovation

as exciting and effective instrument for India’s transformation”. Indian Government is considering startups as new

engine of employment generation and growth. Startups are making news nowadays and in gaining popularity in India.

Their number is increasing day by day. Some of the successful startups are financed or take over by big companies.

These startups are highly concentrated in cities. Startup is a new dimension added to the characteristics of cities. The

economists are writing number of articles on number, type, investment and different aspects of startups. We

geographer are not able to take note of these. It is necessary to analyse the geographical dimensions of startups.

Therefore, this paper attempts to trace out the spatial distribution and types of these startup cities in India using

secondary data extracted from angel list of startups up to March 2016.

Key words: startup cities, innovation, ICT, GIS, QGIS, techies, open source software.

I. INTRODUCTION

There is a noise of the word “startup” nowadays. Everyone

is talking about this word. The print media especially

economic ones are full of articles related to startups. The

new generation of students passing out of IIT‟s, IIIT‟s,

IIM‟s and other technological and management institutes

loves to associate themselves with this word. These

management and technical students working on their

project work sometimes hit some idea of doing something

in a different manner using technology and management

skills. These new ideas or innovation brought a

revolutionary change in the manner business is done or

commerce is done or payment is made or products and

services are supplied to customers using information and

communication technology. New companies are formed to

use these innovative ideas and earned millions. Facebook,

Google, Amazon.com etc. present day big companies were

started as startups. The term gain popularity during the

dot.com bubble when number of dot.com companies

formed. Those who provided these innovative ideas also

become partners in these companies and become

millioner‟s over the night. Big companies, big banks and

venture capitalists run after these newly formed companies

either to take over or to finance these. The students are

encouraged to develop more and more such innovative

ideas by financial and other support. These newly

established entities, now termed as startups are now hot

cakes of the day in India. The startups are coming up in

metropolitan cities of India. Cities are centers of very high

density of population, mainly engaged in non-agricultural

activities. The population is usually well educated, trained,

highly technical and innovative. Cities with such population

are vibrant and energetic and lead the country in different

sectors of socio-cultural-economy of the country.

Historically cities led the society in trade and commerce,

administration, education and industrial activities. In

economic development planning cities acted as the Growth

Pole or Growth foci through which the development trickle

down to smaller settlements. The history of economic

development indicates that the Growth pole model resulted

into concentration of development at these cities only. So

the focus shifted to the development of rural areas and

smaller towns. Now the Information and communication




technology again brought the cities into centre of

development by introducing a new entity named startups in

highly technical cities. The present paper attempts to

analyse the spatial distribution of startup cities of India to

find out locational factors and try to develop a typology of

these startups to classify the startup cities into different

groups. QGIS open source Geographical Information

System (GIS) software has been used to present the data on

map.

Meaning and Definition: The word startup as a noun

means the action or process of setting something in motion

or a newly established business. As per Cambridge

dictionary startup means a small business that has just been

started. Startup is defined as “A Startup is a company that is

in the first stage of its operations. These companies are

often initially bank rolled by their entrepreneurial founders

as they attempt to capitalize on developing a product or

service for which they believe there is a demand” as per

investopedia.com. “Early stage in the life cycle of

an enterprise where the entrepreneur moves from the idea

stage to securing financing, laying down the

basis structure of the business, and

initiating operations or trading” defined by business

dictionary. “A startup is a company working to solve a

problem where the solution is not obvious and success is

not guaranteed,” says Neil Blumenthal, cofounder and co-

CEO of Warby Parker. “Startup is a state of mind,” says

Adora Cheung, cofounder and CEO of Homejoy, one of

the Hottest U.S. Startups of 2013. It can be concluded that

startup is a new company just started by founder

entrepreneur to provide a product or service to meet the

demand of the market.

Distribution of Startup cities at Global Level: The

present paper is based on Angel list of startups located in

different countries. There is no other source to verify this

list. The list may not be complete but it gives an estimate of

startups in different countries and cities of world. The

number of startups is highest in North American continent

followed by Europe and Asia. The number is very small in

South America, Oceania and Africa. This clearly indicates

that the number of startups is closely related with the level

of technological development and technology friendly

population. It is higher in the developed regions while very

low in underdeveloped or developing regions of world.

Although the two largest populated countries are located in

Asia but the number of startups is comparatively very low

(Table No. 1). At city level, Silicon Valley and the San

Francisco Bay Area of California of United States of

America have long been the world leaders in high-tech

startups, giving rise to cutting-edge companies from

Apple and Intel to Google, Facebook, and Twitter. But

recent years have seen the rise of an increasingly potent

group of cities around the world that are generating new

startups in creative and unique ways. (Richard Florida,

2015). It is followed by New York, Los Angeles, and

Boston. Most of the leading cities are from United States of

America. The only Indian city appeared in Richard‟s list of

20 leading city is Bangalore at 15th

place. Bangalore is also

placed as the third fastest growing startup cities in world.

Table No. 1 Number of Startups in World (as on 30th

March 2016)

Region Number of Startups

North America 109,674

Europe 35,257

Asia 30,017

South America 4,719

Oceania 3,722

Africa 2,880

Total 186269

(Source https://angel.co/locations)

Startups in India: Till recently, the uses of Information

and communication technology (ICT) were limited in

commerce, business and services sector of India. With the

expansion of management and technological education

institutes like IIT‟s, IIIT‟s, NIIT‟s and IIM‟s etc., a large

number of young graduates are coming out into the market

equipped with information and communication technology.

On the other hand, an increase in ICT literacy of population

and its application by customers created a demand for ICT

enabled business, commerce and services. The young

technocrat‟s new ideas of application of ICT in business,

commerce and services sectors of the economy brought a

revolution in India. There are new ways of doing business,

new ways of doing commerce and new ways of providing

services and products to the customers. As a result number

of startups came up in the last five years. There number

increased almost 40 percent, the amount invested increased

125 percent, and the use of technology, the number of

persons employed reached to 85 thousands in last year‟s.

These are only some rough estimates reported in various

newspapers or magazines and going to shoot in the near

future. The interest shown and capital invested by foreign

banks and companies made startups in India a hot cake. The

fresh graduates coming out of management and

technological institutes become employer over the night.

Every year startups starts appearing in new cities and in

sectors. New Government of India realized the importance

of startups in application of ICT in different sectors of

economy, in attraction of foreign investment, and especially

in diverting the students towards starting their own

companies. The students passing out of these institutes are

now employer and not employee. They are now employing

others rather than searching for jobs.

Government of India Notification: The economy of any

country depends on economic activities carried out by the

workforce. Larger the number of employed or working

people better be the economy. After independence, first

agriculture sector and then industrial sector was developed

to produce food grains and jobs. With the changing

http://www.businessdictionary.com/definition/stage.html

http://www.businessdictionary.com/definition/life-cycle.html

http://www.businessdictionary.com/definition/enterprise.html

http://www.businessdictionary.com/definition/entrepreneur.html

http://www.businessdictionary.com/definition/financing.html

http://www.businessdictionary.com/definition/structure.html

http://www.businessdictionary.com/definition/business.html

http://www.businessdictionary.com/definition/operations.html

http://www.businessdictionary.com/definition/trader.html

http://www.forbes.com/sites/natalierobehmed/2013/12/16/the-hottest-startups-of-2013/

http://www.forbes.com/sites/natalierobehmed/2013/12/16/the-hottest-startups-of-2013/




technology, globalization, and privatization the role of the

government was focused on policy making. This led to the

growth of private sector in India. Startups are also totally

promoted by private financers. The Indian government

realized that Indian people have the potential to work hard,

all they need is, a promising start up. Many people dream of

starting up their own business, but due to financial or other

similar issues are unable to do so. So, Indian Government

in the leadership of honorable Prime Minister has decided

to offer a gift as a nation wise program- “Start up India”.

“Start up India” is a revolutionary scheme that has been

started to help the people who wish to start their own

business. These people have ideas and capability, so the

government will give them support to make sure they can

implement their ideas and grow. Success of this scheme

will eventually make India, a better economy and a strong

nation. On April 17, 2015, the Ministry of Commerce and

Industry released a notification to define „startups‟. An

entity will be identified as a startup:

i) Till up to five years from the date of

incorporation.

ii) If its turnover does not exceed 25 crores in the

last five financial years.

iii) It is working towards innovation,

development, deployment, and commercialisation of

new products, processes, or services driven by

technology or intellectual property.

Another observation leads to the fact that an entity shall be

considered a startup only if it aims to develop and

commercialise – a new product or a service or a process or

significantly improves on a product or service or process

which will add significant value for customers or workflow.

You are not liable to get the tax benefits as you will not be

defined as a startup unless there is some innovation in your

product or process or services. The technical institutes are

also promoting their students to work for a startup for a

year or two and then again may appear for placement if not

successful. As a result number of students is trying their

hand on startups in India. Housing.com, flipcart, snapdeal

etc are some of the successful one.

Spatial distribution of Startup Cities in India: The

locations of primary activities are normally found in

villages, the locations of industries are according to either

the sources of raw material or market. These startups need

innovative entrepreneurs, high speed internet, advanced

computers, uninterrupted supply of electricity and

motivated technical workforce. Though there is requirement

of capital also but capital will flow if other requirements are

met. Another important requirement is demand of ICT

based services and concentration of population who can pay

a small amount for these services. The urban population of

India is well educated, smart phone users, single families

and most importantly both husband and wife working

during the day. Due to late working hours in private sector

this new generation has no time to visit market to purchase

or to visit billing centers to deposit bill amount etc. They

prefer only portals to do all their odd jobs. Hence large

urban centers like Delhi, Bangalore, Mumbai, Chennai etc

are the most favourable location for these startups.

Figure No 1. Spatial Distribution of Startups in Indian Cities

( Prepared by the author based on Angel list of Startups at their website https://angel.co/)




A quick glance at the map (Figure No 1) reveals that the

startup cities are clustered in India, strictly following the

pattern of distribution of metropolitan cities. Most of the

startup cities are either metropolitan city or city located

near these. The biggest cluster is in north India including

the cities of Delhi, Gurgaon, Noida, and Ghaziabad. This

cluster branches into two directions, first towards Kolkata

through the northern plains along river Ganges. The second

branch passes through startup cities located along Rajasthan

and Madhya Pradesh border, Gujarat and Maharashtra

border, right up to Mumbai. The second cluster of startup

cities is in South India including Bangalore, Chennai,

Hyderabad and other major south India cities. This seems to

follow the golden quadrangle of national highways.

Another factor which played important role in the spatial

distribution of startup cities is the location of IIT‟s, IIIT‟s,

and other technological and management institutes. All the

major startup cities are centre of IIT‟s, IIIT‟s, IIM‟s or

NIIT or some regional institute.

Regional Distribution of Startup cities in India: If we

divide India into five regions and clubbed the startup cities

in these five regions, it is observed that the South India

leads in the number of startup cities closely followed by

North Region. (Figure No 2). South Indian region includes

the metropolitan and capital cities of Bangalore, Chennai

and Hyderabad. Bangalore is the hub of electronic and ICT

companies similar to Silicon Valley. Chennai is offering an

alternative location to ICT companies near Bangalore. In

north region the capital city of New Delhi is the main hub.

Alternative locations are offered by Gurgaon and Noida.

The third place is of Western Region. In the western region

only two important cities of Bombay and Pune are the

centres of startups. The number of startup cities was very

small in eastern region and smallest in central region.

Eastern region is more industrial and the size of population

is smaller in central region cities.

Number of Startups in Indian Cities: As per the list

available on Angel list website, the total number of startups

is around 15000 in India. The largest number of estimated

startups was reported in Bangalore, the silicon valley of

India. Bangalore is the only city in the top 20 startup cities

of world ranking 15th

and the third fastest growing city with

respect to number of startups. Bangalore was found

outstanding due to its technological advantage (large sizes

of circle in figure no 3). Bangalore is the heart of computer

and information and communication technology for a long

period. Though there is no IIT in Bangalore, but there is

large number of ICT based and electronic companies along

with engineering and management institutes. These ICT

based companies are hub of innovative activities. Bangalore

(almost one-fourth of Indian startups) is followed by two

close cities of New Delhi (one-fifth of startups) and

Mumbai where a demand is found for such services due to

mobile friendly large metropolitan population (Table No.

2). Location of IIT‟s in both the cities is one of the

important factors, and there are other institutes leading

students in various innovative activities. At the third level,

are the startup cities of Hyderabad, Gurgaon and Pune.

Hyderabad, the capital city of Andhra Pradesh is an

independent centre of startups, where number of

management institutes is located. Gurgaon and Pune are

developing as independent hub of technology near the

metropolitan cities of Delhi and Mumbai. These two cities

offered alternative locations near Delhi and Mumbai.

Figure No 2 Regional Distributions of Startup cities in

India (as on 30th

March 2016)

( Based on Angel list of Startups at their website

https://angel.co/).

37

34

26

2 1

Regional Distribution of Startups in India Cities

(in percent)

South

North

West

East

Central




Figure No. 3 Number of Startups in Indian Cities


Table No. 2. Number of Startups in Indian Cities (as on 30th

March 2016)

Name of City Number of Startups Percent Startups

Bangalore 3599 23.56

New Delhi 2992 19.59

Mumbai 2106 13.79

Hyderabad 960 6.29

Gurgaon 883 5.78

Pune 821 5.38

Noida 414 2.71

Chennai 384 2.51

Jaipur 375 1.80

Chandigarh 213 1.39

Calcutta 171 1.12

Kochi 131 0.86

Ahmedabad 105 0.69

Others 2219 14.53

Total 15273 100

( Based on Angel list of Startups at their website https://angel.co/)

The fourth level startup cities are Jaipur, Chandigarh, Calcutta, Kochi and Ahmedabad where the number of startups varies

from 275 to 105. In addition to these major startup cities, there are other 100 more cities where startups are less than 100

spread over the country. (Small size of proportional circles in Figure No. 3) The number of startups is comparatively lesser in

these cities because of the size of population and their distant location from the four metropolitan cities of India. An attempt is

made to analyse the relationship between size of population and number of startups in a city (Figure No 4). It seems there is

some relationship between population and number of startup in a city, but closeness to larger metropolis disrupts this

relationship. This may need to be further tested taking the all the nearby cities together as an agglomeration.

https://angel.co/




Figure No 4 : Distribution of Number of Startups with Size of City of Population


Types of Startups in Indian Cities: An attempt is made to classify the startups in 10 categories on the basis of type of main

activities of the entity. The categories include Mobile App, Education, E-Commerce, Social, Health Care, Hyper local, Online,

Travel, Food and others. The most important type of startups is Mobile App and related activities. (Figure No 4) Educational,

Web based and E-commerce startups are at second place in proportion of the total types of entities. A significant proportion of

social, health care, hyper local (consolidates the orders and handles the delivery), online, travel, and food based activities are

also reported in Indian cities. The proportion of different types of startups in Indian cities is almost same across the country

and the share of Mobile App based startups is highest in all the cities.

Figure No 4 Types of Startups in Indian Cities (as on 30th

March 2016)

( Based on Angel list of Startups at their website https://angel.co/)

II. RESULTS AND DISCUSSIONS

On the basis of analysis of number of startups, their types,

number of startups in Indian cities, spatial distribution of

startup cities and their typology, the following points may

be highlighted:

Startups normally appear in the cities having a large

population base, diversified in nature, higher proportion

of employed population, and high level of use of

computer and mobile technology. The distribution of

startup cities in India strictly follows the distribution

pattern of large cities. Startups are almost absent in villages

or primarily rural area. Startup cities are found more

around cities, in general, and metro cities, in particular. The

distribution pattern of startup cities seems to follow the

golden quadrangle of national highways. This indicates that

there is some relationship between the location of startup

cities and highways. It needs to be further statistically

tested.

The number of startups is more in metropolis and

surrounding cities and less in smaller cities. Highly

urbanized, diverse, technically literate and employed

population is base for startup entities. Metropolitan cities

are concentration of this type of population. Another

characteristics, which is necessary for startups and found in

metropolitan cities is the use of smart phones. In

metropolitan cities the level of use of smart phones is very

high, here even a kid is found using mobile phone to order

7

5

5 5

4

3

3

3 2 2

Types of Startups in Indian Cities (in Percent)

Mobile App

Education

Web

E-Commerce

Social

Health Care

Hyperlocal

Online




his pizza or his toys online. The use of mobile phone is

going to increase further not only in metropolitan cities but

also in the small towns and after some time even in

villages. This increase in use of mobiles will further

increase the number of startups and a day will come when

the startups may be found located in rural areas.

The startups can be classified on the basis of type of

activities performed. Startups are trying to help the

customers in reducing their time and energy spent in day to

day work by providing solutions at the press of a key of

their mobile phone or click of a mouse. At present mobile

app, web, education and e-commerce are the four important

types of startups activities reported in Indian cities. The

number of startups in each type is going to further increase

with the increase in number of smart phone users in

metropolitan cities, smaller cities and villages. The

reduction in the prices of smart phones, when made in India

phones will be launched will further increase users in India.

It is pertinent to mention here that the type of activities

found in startups will also increase in future to extend

startups in new sectors of the economy. It has been

observed that the types of activities are almost similar in

nature and magnitude across the startups cities in the

country. These activities may be different but the mode of

provision of services is based on ICT. The classification

exercise needs more data, time and deliberation.

The startups are considered as new engine of economic

development and attraction of foreign investment in the

country. The startups are the only way to realize the slogan

of Employer not Employee, slogan highlighted by the

present prime minister of the country. There is an increase

in revenue to the local government. The startups may again

bring the Growth pole theory in focus as these are located

in the larger regional cities of the area. Time will come

when these startups will be based in the surrounding rural

areas to take benefits of economy. There is a need to have

startups to help the farmers of the country, so that their

products may be purchased directly or processed at village

level and then supplied to the consumers. This will not only

help the farmers in getting a reasonable price of their crop,

but the consumers will also get these products at lower

rates. A larger section of our society, farmer is not able to

benefit by the economic models adopted till date. Such

startups, even if, located in urban areas, but dealing directly

with the farmers will definitely improve the conditions of

the farmers,

The startups will encourage young generation to learn skills

than general education. The startups have scope of job

generation for educated and skilled young generation for

coming years. The young generation will start generating

jobs rather than looking for jobs. This will lead to

expansion of jobs in private sector, and reduce the burden

on government.

The startups may again lead to disparities between urban

skilled and rural non skilled youth. The involvement of

skilled workforce is more in startups. The urban youth

responds to the current situation quickly and start taking

skill education, on the other hand the rural still opt for

general education. The growth of startups will further led to

fresh migration stream from rural areas and small towns to

Metro Cities. The startups will be highly concentrated in

metro cities so skilled youth will migrate from small cities

and rural areas to these startup cities.

It is observed that the workforce employed in the startups is

mostly from other urban centers. This new workforce

earning high salary contributes to income tax, tax to the

local government and infuses energy in the slowdown of

reality sector. On the other hand it is a cause for the tension

between the new techies from other cities, local residents

and local government. There is a need to look into these

issues by the administrative set up of the concerned city.

To conclude it can be said that the number and type of

startups is going to increase further in near future. The

concentration of these startups needs to be diverted towards

rural areas to have a better spatial distribution. There is a

need of regulations regarding online activities and

generation of awareness among the population. Further

analyses of data are required to develop a typology of the

startup entities and relationship between size and number of

startups in cities.

ACKNOWLEDGEMENT

The notification of Indian Government on startups is taken

from the official website of the government of India. The

list of startups is extracted from the angel.co/india website.

This is the only source of such data. The author is highly

indebted to the website for publication of such data on their

site for public use. The author is also highly indebted to

Pulkit Chhiller, student of B.E. Computer Engineering,

NSIT, Dwarka, for help provided in extraction of html data

into excel format. Without his help, it would not have been

possible to write this paper.

REFERENCES

[1] Florida, Richard (2015) The World‟s Leading Startup Cities:

Challengers to Silicon Valley include New York, L.A.,

Boston, Tel Aviv, and London. Published on

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startup-cities/399623/ Accessed 26 April 2016

[2] Florida, Richard (2014): Rise of the Startup City: The

Changing Geography of the Venture Capital Financed

Innovation. Working Paper Series: Martin Prosperity

Research, University of Toronto Charlotta Mellander,

Jönköping International Business School.

[3] Track.in, website, trak.in/india-startup-funding-investment-

2015/ for list of startups funded till March 2016. Accessed 26

April 2016

[4] http://www.businessdictionary.com/definition/startup.html

Accessed 26 April 2016

[5] http://www.forbes.com/sites/natalierobehmed/2013/12/16/wh

at-is-a-startup/#3a0a93254c63 Accessed 26 April 2016

http://www.citylab.com/tech/2015/07/the-worlds-leading-startup-cities/399623/

http://www.citylab.com/tech/2015/07/the-worlds-leading-startup-cities/399623/

http://www.businessdictionary.com/definition/startup.html

http://www.forbes.com/sites/natalierobehmed/2013/12/16/what-is-a-startup/#3a0a93254c63

http://www.forbes.com/sites/natalierobehmed/2013/12/16/what-is-a-startup/#3a0a93254c63

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